Porting Mortgage and Broken Interest

Hi, 

I recently bought a new property. As we were still well within the fixed term of our existing mortgage (£200k) we had to port that and also take out a second smaller mortgage (c£90k) to cover the price of the purchase. We moved on the 21st of December. 

For the older mortgage we made our usual payments at start of December and start of January (£1250) then received a letter saying they were going to take £2,100 on middle of Jan in respect of the January mortgage payments (plus broken interest) before going to £1700 from start of Feb which will be the ongoing monthly payment.

All the mortgages are with the same provider.

I called up to query this as having already made a payment at the start of January for the existing part of the mortgage I didn’t understand why I was having to make another payment for that. The £2100 payment was roughly broken down into £1550 for the existing mortgage and £550 for the new. They explained the payments were higher due to broken interest (e.g. interest to be paid for period from 21st to end December). I can understand that for the new smaller mortgage but is it right that I’m paying extra for broken interest on the mortgage being ported given that I had paid the December payment (including interest for whole of month on 1st December and have also made the January payment.

Eventually after multiple calls and a trip into branch they agreed to refund the January payment already made of £1250 but essentially that same payment is now costing me £1550 because of them charging interest twice. 

I know it’s not a huge sum of money but the £300 could be spent better on other things than having to pay interest twice! 

Has anyone else had a similar issue? Is what they have done correct or is it something I should continue to question them on? 

Comments

  • penners324
    penners324 Posts: 2,569
    First Anniversary First Post Name Dropper
    Forumite
    Sounds like the letter showing the new payment didn't include the payment made at the beginning of January.

    Pretty standard as it takes a few days for the payment to be processed.

    They were likely to refund that or keep it as an overpayment anyway. Or even adjust February's payment....
  • Cheers yea they’ve refunded the start of January payment of £1250 but essentially that same payment will now be £1550 as they are charging the interest for 21st to 31st December but I’d already paid a full months interest on that portion of the mortgages in December so wasn’t sure if it’s right I’m paying that part of the interest twice. 
Meet your Ambassadors

Categories

  • All Categories
  • 341.6K Banking & Borrowing
  • 249.7K Reduce Debt & Boost Income
  • 449.1K Spending & Discounts
  • 233.7K Work, Benefits & Business
  • 605.7K Mortgages, Homes & Bills
  • 172.4K Life & Family
  • 246.6K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.8K Discuss & Feedback
  • 15.1K Coronavirus Support Boards